Losses above $5m in the US healthcare insurance sector are accounting for a rising proportion of total dollars spent in claims, according to Hiscox. In the early 2000s, the percentage of total dollars spent in claims for losses of this size was between 7.5% and 10% per year; now that figure has moved up to 15%-25%, and is expected to rise higher still, Hiscox says.
The growth in healthcare super losses – involving claims above $50m – is having a clear impact on this trend, with 50% of the largest medical malpractice claims paid in history coming in the past five years.
Commenting on the research, Justin Keith, Vice President, Hiscox, said: “This increase in the proportion of dollars spent in claims on losses above $5m for medical malpractice is a worrying trend for US healthcare. And we know that 2014 is shaping up to make the figures look even worse.
“US healthcare reform is having both a positive and negative impact on these costs. On the plus side, we’re seeing better risk management, improved patient safety programmes and a seemingly positive effect of Accountable Care Organizations on quality, while claims handling has become much better. We are also seeing many positives coming from the significant investments in resources and talent.
“On the flip side, however, significant disruption has been generated by an increased number of mergers and acquisitions among healthcare facilities, accompanied by a fundamental shift in the business of delivering healthcare and a squeeze on margins. When it comes to litigation, the effects of all of this change on jury pools remains uncertain, but as community hospitals start looking more like big business it's no surprise juries appear to be handing out larger awards."
“Some recent market losses however have come from high-quality facilities which proves that, even though they can demonstrate excellent leadership, risk management and in-house claims teams, big medical malpractice claims can strike anyone at any time. It sounds a warning to those insurers who simply see medical malpractice as a profitable makeweight to their other lines of business.”
For more details contact:
Justin Keith
Vice President – Hiscox Bermuda
+1 441 278 8512
[email protected]
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